March 11, 2019
The Valleys Innovation Council, an organization dedicated to growing and strengthening the region’s innovation economy, announced today the completion of a regional capital landscape study for start-ups and issued recommendations on how to strengthen the region’s capital ecosystem.
The study examined the availability of and the types of grant and equity funding sources, including angel and venture capital investments, necessary to support early-stage, high-growth start-ups in GO Virginia Region 2 (the Alleghany Highlands, Greater Lynchburg, the New River Valley, and the Roanoke Valley). The report incorporates survey data from regional stakeholders regarding their perception of regional capital availability and includes a comparative analysis of funding levels with selected peer areas including Charlottesville, VA, Chattanooga, TN, Greenville, SC and Birmingham, AL.
The study reveals that Region 2 companies have been very successful in securing funding from grant sources, such as the federal Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs, used to advance product research and development. Over $100 million was infused into thirty-one (31) Region 2 companies between 2014-2017 from these sources. However, Region 2 companies raised less investment capital (~$37 million) from angel and venture capital sources over the last four years compared to companies in peer areas such as Charlottesville ($202 million) and Chattanooga ($190 million). The study recommendations include organizing an angel investor group, augmenting commercialization programs for SBIR/STTR recipients, and supporting efforts to build connections with angel networks and venture capital investors outside the region in order to give local investors syndication partners and regional companies greater access.
The study was led by CIE Partners consultant, Sam English, PhD, in collaboration with Virginia Tech Associate Dean of Research and Faculty Affairs, Kevin Carlson, PhD, Skyline Capital Strategies, LLC President, Greg Feldmann, and Valleys Innovation Council Program Director, Meredith Hundley, PhD.
“By identifying parts of the capital ecosystem that warrant attention, we’re able to develop plans to strengthen them and more efficiently focus our community’s resources,” said Sam English. “For example, a recommendation from the study is to start an angel investor group, so we’re already working to organize one that will be comprised of regional angel investors.” Angel investing activity has become a mainstream component of building a sustainable and vibrant start-up community.
Another capital source highlighted in the study is the important role that seed funds can play in a region’s capital ecosystem. James Ramey, Managing Partner of the Virginia Tech Carilion (VTC) Seed Fund, “We are really enthusiastic about the growth we’ve seen, and will continue to see, in the regional entrepreneurial ecosystem. One of the goals of both the VTC Seed Fund and the VTC Innovation Fund is to invest alongside regional angel investors and angel groups to continue to drive this growth.”
“This report confirms perceived challenges in generating “deal flow” and keeping promising entrepreneurial start-ups in the region,” commented Kevin Carlson. “Better understanding of these challenges is essential if they are to be overcome.” Carlson went on to note that “Yet, surveyed respondents are very optimistic about the ecosystem’s future.”
Meredith Hundley said “The Valleys Innovation Council will continue to monitor capital access issues for innovation-based start-ups in the region. And now with baseline measurements and methodology to track changes in the capital ecosystem over time, we will be able to quantify the impact of new programs and track their success. We are committed to developing strategies in collaboration with our investment and entrepreneurial communities to help assure access to the continuum of capital sources necessary for a vibrant innovation-based start-up community.”
The Capital Landscape Report and an interactive data dashboard can be accessed on the Valleys Innovation Council website here: https://www.valleysinnovation.org/project-capeco
The project is funded in part by a grant from the GO Virginia 2 Council with matching support from Virginia Tech, Carilion Clinic, Roanoke City, Roanoke County, and Skyline Capital Strategies, LLC.
About Valleys Innovation Council
Valleys Innovation Council is a 501(c)(3) nonprofit organization that shapes the region’s innovation economy and supporting ecosystem by connecting, communicating, and collaborating with stakeholders to align regional assets and priorities. To learn more, please visit: https://www.valleysinnovation.org/
Interim CEO, Valleys Innovation Council